Minimum Wage Hurts Poor Workers, New Study Finds

‘The job loss is concentrated among poor families,’ says paper by UC Irvine professor

A 1987 New York Times editorial made a point that is reinforced by newly published research: “Raising the minimum wage by a substantial amount would price working poor people out of the job market.”

A new study by academic economists concludes that higher minimum wages hurt low-income workers by reducing their hours, the chance that they remain employed, and their overall income.

The working paper, “Do Minimum Wages Help Workers in Poor and Low Income Families?“ was released this month via the National Bureau of Economic Research by David Neumark, who is distinguished professor of economics at the University of California, Irvine, and Emma Wohl, a UC Irvine economics Ph.D.

The paper comes as Democratic and socialist political candidates press a federal minimum wage increase as a central policy initiative in the 2026 midterm election campaign. Senator Bernie Sanders, the Vermont socialist, greeted the victory of Abdul El-Sayed in the Michigan Democratic primary with a video, “What Abdul’s Victory Means,” asserting, “what we’ve got to do is raise the federal minimum wage to a living wage, at least 20 bucks an hour, maybe higher.” The Democratic U.S. Senate candidate in Texas, James Talarico, lists “raise the federal minimum wage to $15 an hour” at the very top of his priorities in the labor and business category. The Democratic U.S. Senate candidate in Maine, Troy Jackson, has been publicly plumping for an increased federal minimum wage since 2014, during the Obama administration. The Democratic U.S. Senate candidate in Iowa, Josh Turek, is campaigning on a promise of legislation to raise the federal minimum wage and index it to inflation.

The new paper by the economists uses data covering October 2003 to December 2016 from the Survey of Income and Program Participation, a census survey that oversamples low-income families. Among the key findings: “higher minimum wages lead to declines in the probability that low-wage workers remain employed.” Also, “higher minimum wages lead to hours declines for initially-employed low-wage workers.” Third, “higher minimum wages lead to earnings declines for initially-employed low-wage workers.”

“We do find adverse effects of minimum wages on the employment, hours, and earnings of poor and low-income workers,” the study says. “Most importantly, none of our evidence points to beneficial effects of higher minimum wages for low-wage or low-skill workers in the lowest-income families.”

Studying the income level of the families is important, because a lot of minimum wage workers are young people—prep school students or suburban public high school students working during the summer at a yacht club, for example. Other minimum-wage workers sometimes gain skills, get promoted, or move out of the minimum wage category.

The fact that hours worked are flexible rather than fixed at 40 or 35 hours a week is an underappreciated fact in the political and economic discourse over the effects of minimum wage increases. The employed workers in the three lowest of the six poverty “bins” in the study worked an average of 24.1, 28.1, and 31.7 hours a week. As a practical matter, rather than predictably working 9 am to 5 pm Monday through Friday, many minimum wage workers work in retail or service industry settings where they get notified of their work schedule on short notice, depending on what some data analytics program forecasts about demand depending on anything from the weather forecast to seasonal variations on how busy the store is.

The paper is getting some attention online, with a social media post from Scott Lincicome, a vice president of the libertarian-oriented Cato Institute, that was amplified by Clifford Asness, a money manager and philanthropist. Neumark told the Washington Free Beacon that the paper is so new—he hasn’t yet presented it to fellow academics—that other reaction has so far been limited.

There’s a long-running academic debate over minimum wage policies, and coverage of it in the left-leaning press—the New York Times 1987 editorial “The Right Minimum Wage: $0.00“ a notable exception—has disproportionately emphasized work by an economist who found that modest minimum wage increases were less harmful than neoclassical economics had thought. That economist, Alan Krueger, a professor at Princeton, was chairman of President Obama’s Council of Economic Advisers and died by suicide in 2019 at age 58.

Neumark, a Harvard economics Ph.D. who studied with giants in the field such as Lawrence Katz and Zvi Griliches, said that views are so deeply entrenched on both sides of the minimum wage policy debate that empirical findings may not sway beliefs, at least in the short term.

“I think the ‘hard’ left is sold on the minimum wage despite the evidence (which I think quite convincingly says there is some job loss, and poverty doesn’t fall),” he wrote the Free Beacon. “The new result here is that workers in the lowest-income families are on net hurt. But the ideological predilection is strong (true on the right as well). In the longer run — and I’ve been involved with this topic for decades — I think the body of research arguing against the selective work emphasized by advocates for a higher minimum wage has slowed increases down. The real problem is that policies to make low-wage/low-income workers better off are harder and require government spending, whereas raising the minimum wage is an unfunded mandate.”

The current federal minimum wage is $7.25 an hour and has been at that level since July 2009, though many cities and states have established significantly higher levels.

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